This note shows that a public pension system with a fairly general individual tax-benefit linkage is (computationally) equivalent to a system without linkages. The "equivalent" pension system without linkages not only facilitates simulations of policy experiments but also offers some insight into the implied tax structure of the tax-benefit linkage. It is shown that implicit tax rates may differ considerably across age groups even if the statutory tax rate is constant over the life-cycle.
During the last decade the traditionally high participation rate of elderly workers in Switzerland has remained constant for men and has increased substantially for women. Low social security implicit tax rates epitomize positive work incentives for mid- and high-income individuals, while at the same time generous means-tested social assistance make working longer than the earliest retirement age unattractive for low-income earners. A more subtle reason to retire early is the pure income effect brought about by high retirement benefits for all income groups. These high benefits together with demographic ageing are also the main reason for the unfavourable financial prospects for both the PAYG first pillar and funded occupational pension plans. Interestingly, the financial crisis has not only reduced the value of assets in the funded components of the scheme, but also uncovered structural deficiencies of the second pillar with respect to the funding ratio, regulation and supervision.
Die Ölplattform "Deepwater Horizon" bohrte ohne Umweltanalyse und ohne Back-up-System im Golf von Mexiko - mit ausdrücklicher staatlicher Erlaubnis. Die Finanzindustrie lässt weiter risikoreiche Geschäfte sprudeln - mit Duldung der Staaten, die sich nicht zu einer Strategie zur Verringerung dieser Risiken durchringen können. Gleichzeitig diskutieren manche dieser Staaten - nachdem der armen Glühbirne bereits der Garaus gemacht wurde - eine Verbot von Kaugummi-Zigaretten.
We use a unique dataset on individual retirement decisions in Swiss pension funds to analyze the choice between an annuity and a lump sum at retirement. Our analysis suggests the existence of an "acquiescence bias", meaning that a majority of retirees chooses the standard option offered by the pensions fund or suggested by common practice. Small levels of accumulated pension capital are much more likely to be withdrawn as a lump sum, suggesting a potential moral hazard behavior or a magnitude effect. We hardly find evidence for adverse selection effects in the data. Single men, for example, whose money's worth of an annuity is considerably below the corresponding value of married men, are not likely to choose the capital option.
